Friday, June 12, 2009

Beeronomics: Search Costs

Economists describe the cost of having to search (for a product, a low price, a mate, etc.) as, you guessed it, search costs.  The result in equilibrium is that the higher the cost of searching the less you will do.  So, for example, I was much more inclined to buy a CD, say, at whatever price I saw it for it the store I happened to be at than I am now that I can search for low prices easily on the internets.  (Yes, I know, I am a dinosaur, I still buy the occasional CD)  This leads to more intense competition, lower prices and, ironically, less of a need to search in the end because price disparities will be lower.  

It is for this reason I celebrate the release of Beer Signal, a new free iPhone app that allows you to search the current tap lists of Portland-area pubs.  I'll let Jeff of Beervana explain it in detail.  My first try, based on first hand knowledge of a neighborhood pub I patronized yesterday with an end of school year celebratory fish and chips with my son suggests it has some work to do to become very accurate (which will be helped along by users so I am acting in a self-interested way in publicizing it).  Still, it lowers search costs, enhances consumer welfare and will promote diverse and often rotating taps.

Better living through technology indeed...

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